example
LABEL somethig
kernel memdisk
append myFolder/myDisk.img
This is example how you can use folders. In this example isolinux will search for myDisk.img in subfolder of folder that contains isolinux.cfg (in most cases this is /Isolinux folder). If isolinux.cfg is in folder /Isolinux, then myDisk.img should be in /Isolinux/myFolder.
example
LABEL something
kernel /vmlinuz
append max_loop=255 initrd=/initrd.gz init=linuxrc livecd_subdir=/ ...
This one will search for vmlinuz in a parent folder of folder that contains isolinux.cfg. It will also search for initrd.gz in parent folder ( "/" before vmlinuz and before initrd.gz). If isolinux.cfg folder is /Isolinux then files will be searched in root folder of the CD.